Before you commit 25 years, watch how one year of the strategy plays out. Step through the months.
Viewing month
Mortgage bal
248,650
-1,350 YTD
HELOC bal
1,380
+30 interest capitalized
Portfolio
1,408
VDY, 42 shares
YTD HELOC interest
22
deductible
Mortgage payment posts
Payment: 1,461.48. Principal: 339.12. Interest: 1,122.36.
Status: AUTOMATIC. Posted on the 1st.
HELOC limit re-advances
HELOC available credit increases by 339.12. Now available: 339.12 plus prior available.
Status: AUTOMATIC. Same-day with National Bank All-In-One.
HELOC draw to brokerage
Transfer 339.12 from HELOC sub-account to dedicated non-registered brokerage account.
Status: AUTOMATED recurring transfer, 2nd of each month.
Buy income-producing investment
Purchase 10 shares of VDY at approx 33.50, using 335. Leftover 4.12 stays as cash until next month.
Status: AUTOMATED (auto-purchase) or MANUAL (click buy).
HELOC interest capitalizes
Lender charges approx 7.50 interest on the running HELOC balance. Capitalizes onto the HELOC, not debited from chequing.
Status: AUTOMATIC. Logged to the compliance ledger for line 22100 deduction at year end.
Dividend received this month (quarterly)
VDY paid 0.34 per share. 10 shares = 3.40. Swept from brokerage to chequing, then applied as mortgage prepayment. Small now, meaningful by Year 10.
Never forget
The HELOC sub-account is ONLY for investment transfers. No personal charges. Ever.
The brokerage account is ONLY funded by HELOC draws. No personal deposits.
DRIP is OFF. Dividends come to chequing, not back into the portfolio.
Save every statement. Seven years minimum.